There are different routes to becoming a landlord and many reasons for doing so. Maybe you have inherited a property, moved in with a partner, relocated abroad and want to rent out your home, or perhaps you have intentionally bought a buy-to-let property.
Anyone can become a landlord, but however you arrive there, it’s a good idea to understand your landlord responsibilities, and the tax you’ll pay.
In our guide to renting out property, we offer advice for anyone wondering how to become a landlord. Kubie Gold deal exclusively with properties in Central London. If you’re looking for professional and targeted advice from experienced staff in Camden, Fitzrovia, Mayfair, Primrose Hill, Soho or one of the best London commuter towns – keep reading.
We’ll take you through the process, from deciding whether becoming a landlord is worth it to finding your first tenant and paying tax on your income.
Why Become A Landlord?
You may decide to become a landlord for many reasons, from inheriting property and taking a leap into the rental market to intentionally starting a new business venture in property.
Generally, the main reason people become landlords is to make money. Your monthly rent can be used to pay your buy-to-let mortgage and leave you some extra cash every month. Even better if you own the property outright, although you will still need to set aside some money for repairs.
Before deciding to become a landlord, it’s vital that you know what it entails.
1 Check If You’re Even Allowed To Let Your Property
If you have a residential mortgage and plan to rent your property long term, you will most likely need to swap this over to a buy-to-let mortgage. If you are only renting out the property for a short period, then your lender may provide you with consent to let on a residential mortgage.
It’s also essential to check whether the property is freehold or leasehold. If it’s a leasehold, you will need to obtain permission from the leaseholder to let the property.
2 Consider Landlord Costs & Expenses
You will need to factor in all the costs of becoming a landlord to determine whether this is worthwhile for you. You need to look carefully at your outgoings and the rent you will likely achieve, remembering to account for any void periods.
Consider all of the costs you will face, including your buy-to-let mortgage, which is likely to cost more than a residential mortgage, landlord insurance and letting agents’ fees, and the cost of furnishing the home and carrying out maintenance and repairs.
Buy-to-Let Mortgage Costs
Mortgage lenders consider buy-to-let mortgages as more risky. You may encounter void periods, or your tenants may lose their job and cannot pay the rent for a few months. As a landlord, you will still need to be able to pay your mortgage interest. As a result, buy-to-let mortgages tend to have higher interest rates and fees than residential mortgages.
Maintenance of rental property
Repair costs are unpredictable, but as a rule of thumb, budget 1% of your rental property’s value for maintenance each year. This includes covering the costs of your health and safety responsibilities as a landlord – fire safety measures like fitting smoke alarms, gas and electrical safety checks and remedying any faults found.
Refurbishing expenses
Expect to refurbish or redecorate your property every few years to keep it in good condition for tenants. Refurbishment costs depend on the size of your property and the work required.
Letting Agent Fees
A good letting agent can find tenants, collect monthly rent payments and offer management services, but remember to account for agent fees.
These fees will vary according to the level of service, so you need to weigh up the financial cost of the service against the time you save in delegating this to an agent.
Void Periods
There will be times when you have a void period between tenancies and won’t be generating any rental income, but will have to cover council tax and utility bills.
Ensure you can meet your financial commitments between tenancies without rent to cover costs. It is wise to budget explicitly for void periods and assume they will happen at some point – rather than simply hoping they don’t!
Insurance can limit the financial damage should a problem arise. The cost depends on the level of coverage you choose, but in general, they can save you money in the long run. There’s more than one type of landlord insurance policy, such as:
Buildings insurance – usually a requirement if you take out a buy-to-let mortgage, protecting the structure of your rental property.
Liability insurance – in case a tenant or their guest has an accident in the property, meaning you will not be personally liable for the injury or damage.
Contents cover – to protect any furniture, fittings or appliances you supply to your tenants.
Unoccupied property insurance – if your rental will be vacant for a longer time, it is a good idea to have insurance which will cover the associated costs.
Rent guarantee insurance – covering lost rent if your tenants stop paying, especially valuable if you are renting to higher-risk tenants who are more likely to default on rent payment.
4 Calculate Rental Yield
Calculate rental yield as a percentage by dividing your annual rental income, less monthly costs, by the property value plus initial expenses, then multiplying by 100. Try using online rental yield calculators to help you check whether the property will be profitable.
A good high street agent can help you find tenants through a trusted name and advertising connections and provide local knowledge and industry experience. You will have to pay agent’s fees, but a good high street estate agent can conduct viewings professionally and collect rent for you. They can also provide management services if you choose.
5 Decide How To Manage Your Property
Before becoming a landlord, you must choose how you’re going to manage your property – and how hands-on you want to be.
Self-managing
You could go it alone instead of choosing a letting agent, if you want to devote more time to becoming a landlord. Landlords may save money this way, but will have to take responsibility for collecting rent, emergency contact, arranging repairs, carrying out inspections and staying up-to-date with your landlord duties.
Managing through a high street letting agent
Using a letting agent can save you time and stress of day-to-day business and handle calls from tenants, or even arrange repairs. There are fees to consider, but they will lend their expertise to challenging situations and landlord legal responsibilities.
Managing through an online or hybrid agent
An online letting agent can be cheaper, but you’ll need to conduct your viewings, reference tenants and take responsibility for your legal duties. Some online agents offer these services for an additional cost, so the savings may not be as significant as they first appear.
6 Prepare Your Property To Let
Decide how you’re going to rent out your property, make sure it looks attractive to tenants, and make sure you’ve covered your landlord responsibilities.
Energy Performance Certificate (EPC)
You’re legally required to hold a valid EPC to advertise your property to tenants. Minimum Energy Efficient Standards (MEES) legislation requires that all rental properties have an EPC rating of at least E. If your property scores lower than this, you must take appropriate steps to improve your property’s energy efficiency.
Fire Safety
It is a legal requirement for landlords to provide fire detection equipment – at least one smoke alarm on every storey of the property and a carbon monoxide alarm in any room containing a solid fuel-burning appliance such as oil or gas boilers and gas or wood fires. You can’t compromise on health and safety when you let out a property.
Property Condition
Under the Homes (Fitness for Human Habitation) Act 2018, landlords must ensure that their properties are safe, warm and dry, and all the utilities and facilities are maintained. Guidelines for this are due to be updated under the Renters’ Rights Bill 2025, with the introduction of Awaab’s Law and the Decent Homes Standard.
Furnished or Unfurnished Rental
Decide whether you are going to rent your house or apartment on a furnished or unfurnished basis. Make sure any furniture you provide still has the fire-safe label attached. Even in unfurnished properties, most tenants expect white goods to be provided, including an oven, hob, fridge, dishwasher, washing machine and tumble dryer.
Decorate and Clean
To help you make your property as appealing as possible to potential tenants, invest some time in sprucing it up. Deal with any outstanding DIY jobs, ensure the property is decorated to a good standard in neutral shades, and replace patterned or dingy carpets with light floor coverings too. Finally, make sure your property is professionally cleaned throughout.
There are some documents you will need to have in place before accepting your first tenant. For more information, read our landlord checklist to ensure you have everything. In summary, you must have the following:
Permission from your mortgage lender – as discussed above you need permission to let your property.
Leasehold property: If your rental property is a leasehold, check your lease agreement to determine if you need permission from the freeholder to rent your home.
Energy Performance Certificate: An EPC shows how energy efficient your property is, and you’ll need one before you can market your property. An EPC is valid for 10 years.
Gas Safety Certificate: You must have a gas safety check performed on your property every year by a gas safe engineer.
Electrical Installation Condition Report (EICR): The electrical installations in your rental property must be inspected and tested by a ‘qualified’ and ‘competent’ person at least every five years.
Portable Appliance Testing (PAT): Portable electrical appliances you provide should be tested by a competent person at least every two years.
Housing licensing: If you rent a large House in Multiple Occupation (HMO), (for example, when renting to students) you will need a license from your local council. Some councils also operate a small HMO landlord licence and selective licensing schemes for all privately rented property. Contact your council to find out more.
Insurance: Your mortgage provider will require you to have landlord buildings insurance, and you should take out contents insurance for the items you supply. Standard home insurance policies won’t cover you if you rent your property.
Tenancy agreement: Draw up a formal tenancy agreement for you and your tenant to sign. There are templates available online.
Inventory: Prepare a comprehensive listing, including photos, of what is in your property and its condition. Again, templates are available online.
How to rent guide: Download the government’s how to rent guide. All landlords must give a copy of this to their tenants. Failure to do so could make it difficult to evict your tenants if they fail to pay rent or break the tenancy agreement in other ways.
The legal requirements and regulations differ when letting a property in Scotland, England, Northern Ireland and Wales.
8 Decide On The Rent
Research property portals for similar rental properties in your local area to see what they charge. Think about how they compare to your property; if your property is better maintained or has an extra bedroom, you may be able to charge a little more.
Work out what your rental yield is likely to be, and make sure that you can afford to offer the price you are advertising at.
Local estate agents are a good source of information too. Tap into their expertise by asking for a free valuation. If you have a rental property in Central London, arrange a valuation with Kubie Gold, and we can tell you how much rent you can expect. Explore how to increase rental property value and set the right rent in our dedicated article.
9 Finding And Referencing Tenants
Now your property is ready, the paperwork is sorted, and you know how much rent you plan to charge, you’re ready to find your first tenant. This involves the following:
Professional photography: Tenants will form their first impression of your property based on the photos. Paying for professional photography and a floor plan will vastly improve your advert. Expect this to cost around £70, and you can reuse them for subsequent lets.
Advertising: Use a high-street or online letting agent to advertise your property on the big property portals like Rightmove and Zoopla. These sites don’t work directly with private landlords. Other options are Gumtree and social media platforms.
Viewings: Once your advert goes live, prospective tenants will want to view your property. Ask them lots of questions so you can better understand the type of tenant they will be. Trust your instincts but remember that you cannot refuse rental based on disability, race, religion, gender or sexuality.
Holding deposit: When a prospective tenant makes an offer, you can ask for a holding deposit while you complete the referencing process. Holding deposits are capped at one week’s rent and must be refunded at the end of the referencing process. You can only keep the deposit if the prospective tenants pull out, provide misleading information, or fail the right-to-rent check.
Tenant referencing and credit checks: To ensure you rent to a reputable person who will pay the rent on time, ask for references from previous landlords or an employer, verify their income by requesting copies of recent payslips and invest in a credit check.
Right to rent checks: In England, the landlord must establish that the tenant possesses the right to rent in the UK. You must ask your tenants for the original documents that prove they can live in the UK; read more here about the right-to-rent documents you can accept.
Security deposit: Always take a deposit to give you security if your tenants damage your property or don’t pay rent. Deposits are capped at five weeks’ rent if the annual rent is below £50,000. If the yearly rental value exceeds this, you can ask for six weeks’ rent as a deposit. Your tenant’s deposit must be placed in one of the government-approved tenancy deposit protection schemes, and you must inform your tenants which one you have used.
10 Paying Tax As A Landlord
Income Tax
When renting a property, you must pay income tax on your profit. If you don’t already do so, you will need to register for a self-assessment with HMRC and complete an annual tax return.
Calculate your profit by deducting your allowable expenses from the rent you have received. You must keep accurate records of the rent you receive and your costs. The Gov.uk website has lots of information about working out your rental income for tax purposes.
The first £1,000 of your income is free from tax; this is your property allowance. You can also deduct certain expenses, though beware – mortgage interest tax relief is no longer an allowable expense for landlords. Allowable expenses you can claim when you rent out your property include:
Cleaning costs
Building insurance
Contents insurance
Legal fees and accountancy fees
Letting agency fees
Repairs and maintenance
Utility bills where applicable
Everyday business expenses
Capital Gains Tax
Capital Gains Tax
When it’s time to sell your buy-to-let property or second home, Capital Gains Tax is applied to any profits over the Capital Gains tax-free allowance. You’re granted an allowance of £3,000 in 2025 – full details are on the gov.uk website.
Stamp Duty Land Tax
You will need to pay SDLT when purchasing your buy-to-let property. As of 31st October 2024, landlords must pay an increased SDLT surcharge depending upon their tax band. As of 1st April 2025, this surcharge will increase again across each band by 2% or so.
What About During The Tenancy?
You have found yourself good tenants, so it is essential to keep them happy. Ensure they have your contact details and respond to their messages immediately. You can also encourage tenants to rent long-term by:
Kubie Gold Associates are an independent local firm of estate agents specialising in the Rental, Sale and Property Management of Residential Property in the North-West and Central London market
